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Is the CBD Bear Trap Set? (NEPT, YCBD, MCTC, CBDD, CWBHF)

The cannabinoid products market continues to represent one of the most dramatic growth opportunities of any market theme over the next 5 years. That has been the conclusion of scores of analysts and researchers in recent years. And it continues to be the dominant view in the analyst community today.

One recent piece of research (May 2020, Industryresearch.biz) for strictly CBD oil shows growth expectations at a CAGR of roughly 32.0% over the next five years, to reach over $1.25 billion by 2024, up from $311.8 million in 2019. These numbers are smaller simply because this is the market for CBD by itself. The market for CBD-based products is much larger, and will grow to be many times this size over the same period, with analysts calling for $15-25 billion in sales by 2025. Grand View Research, for example, puts the global cannabidiol-based products market at a value of $4.6 billion already by 2018. Their research suggests it will grow by over 22% CAGR from 2019 to 2025 to reach nearly $19 billion.

But, no matter how you look at it, CBD is undergoing “mainstreaming” growth, which may be the most explosive type of growth phenomenon that can grip any industry. In other words, the engine behind this extraordinary boom in growth is the process of a small niche market gradually becoming a mainstream household product category.

This type of growth is augmented by increasing presence in high-traffic consumer areas, more marketing and media penetration, and a rising appreciation of the health and wellness benefits that are increasingly understood as part of the equation with CBD-based products.

However, even with this dynamic market theme well written into the future history books, it may come as a surprise to note that there are very few pure-play stocks targeting this thesis. That’s why it’s extremely important to note stocks in the group that seem to be plotting a bold course ahead. With that in mind, we take a look at a selection of active CBD stocks, including Neptune Wellness Solutions Inc (NASDAQ:NEPT), cbdMD Inc (NYSEAMERICAN:YCBD), MCTC Holdings Inc (OTCMKTS:MCTC), CBD of Denver Inc. (OTCMKTS:CBDD), and Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF).

 

Neptune Wellness Solutions Inc (NASDAQ:NEPT) frames itself as a company that operates as a health and wellness products company. The company operates through two segments, Nutraceutical and Cannabis.

The Nutraceutical segment offers turnkey solutions, such as raw material sourcing, formulation, quality control, and quality assurance for omega-3 and hemp-derived ingredients under different delivery forms, including softgels, capsules, and liquids.

The Cannabis segment provides extraction and purification services from cannabis and hemp biomass. The company also offers formulation and manufacturing solutions for value added product forms, such as tinctures, sprays, topicals, vapor products, edibles, and beverages. It offers its products under the Forest Remedies and Ocean Remedies brand.

The company has a strategic collaboration with International Flavors & Fragrances Inc. to co-develop hemp-derived CBD products for the United States market.

Neptune Wellness Solutions Inc (NASDAQ:NEPT) just announced the appointment of Eric Gharakhanian , Ph.D. as Director of Product Development, Health & Wellness Innovations.

According to the release, Dr. Gharakhanian will be responsible for developing and building Neptune’s portfolio of health and wellness products across personal care and homecare, with a focus on sustainable and natural plant-based sanitization wipes, hand sanitizers and other innovations.

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.

Neptune Wellness Solutions Inc (NASDAQ:NEPT) generated sales of $9.5M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 3.9% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($16.6M against $17.2M, respectively).

 

cbdMD Inc (NYSEAMERICAN:YCBD) promulgates itself as a company that produces and distributes various cannibidiol (CBD) products.

It owns and operates the consumer hemp-based CBD brand, cbdMD. The company’s product categories include CBD tinctures, capsules, gummies, bath bombs, topical creams, and animal treats and oils. It also offers pet related CBD products under the Paw CBD brand name.

The company distributes its products through an e-commerce Website, wholesalers, and various brick and mortar retailers in the United States.

cbdMD Inc (NYSEAMERICAN:YCBD) just announced that it has filed a new patent application with the U.S. Patent and Trademark Office which will allow it to pursue patented protection in several key areas, including novel formulations and delivery systems, as well as methods of manufacturing and use.

According to the release, the recent submission by the company is part of its ongoing intellectual property strategy to ensure appropriate protection around its product lines and to be forward-thinking as to the direction of the CBD market.

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 14% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 75% in that time on strong overall action.

cbdMD Inc (NYSEAMERICAN:YCBD) managed to rope in revenues totaling $9.4M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 65.7%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($14.9M against $5.8M).

 

Cannabis Global, Inc. (OTCMKTS:MCTC) has a clear edge in terms of R&D and the development of fresh IP relative to other names in the CBD space.

This is also unusual for companies in the cannabis patch. The lack of IP development is remarkable. Most CBD and cannabis names seem to inevitably give up on trying to lay an IP foundation in favor of just becoming another commodity producer or distributor, rather than investing in R&D and developing strong intellectual property.

MCTC has over a half-dozen strong provisional patents now in process with the USPTO and all signs suggest that number will continue to grow. A good example of how this can become a game-changer is the company’s recent announcement of a breakthrough in THCV production (THCV is an exotic cannabinoid that could hold huge market potential). MCTC has developed the means to produce it at commercial scale.

According to the company, “Cannabis Global has integrated three internally developed technologies into the unique manufacturing process for the industry’s first THCV beverages. The first of these is the process developed by the Company to produce 70%+ loaded THCV, controlled release, nanoparticles utilizing laboratory-based, pharmaceutical-grade production equipment. The Company is also utilizing both its internally developed powerization and one step dosing system, ensuring precise dosing and significantly faster production. The Company has filed provisional patents on all three technologies.”

Cannabis Global Inc. (OTCMKTS:MCTC) just announced the successful application of production techniques developed for Tetrahydrocannabivarin (THC-V) to another rare cannabinoid, Cannabinol (CBN), which the Company believes may have enormous unexplored upside growth potential as a new cannabinoid-based products market.

According to the release, this breakthrough discovery results from continued work on the Company’s ‘Project Varin’ initiative, a core research and development project the Company launched in January 2020 to manufacture new nanotechnologies, infusions and consumer products based on rare cannabinoids. To date, the project has yielded several important product development and production methodology breakthroughs that the Company believes will enable more effective commercialization of products based on rare cannabinoids.

MCTC Holdings Inc (OTCMKTS:MCTC) had no reported sales in its last quarterly financial data. But it appears to be closing in on commercial-stage operational gains for shareholders and has a strong IP edge in the industry.

 

CBD of Denver Inc. (OTCMKTS:CBDD) engages in developing and commercializing cannabidiol (CBD) products. It is involved in the research, development, and distribution of premium hemp extract products. CBD of Denver Inc. operates as a subsidiary of Swiss Industry Ventures AG. CBDD is focused on using equity to acquire profitable Swiss assets at attractive valuations to create value for shareholders.

CBDD offers a superior CBD product that is full spectrum without depending on THC to activate the benefits of the cannabidiol. According to company materials, CBDD was created to offer the consumer a unique and new perspective on the unorganized and confusing CBD industry. CBD of Denver, Inc. is the only company to release a comprehensive CBD Social Network (www.cbdsocialnetwork.com). The idea of the network is to connect CBD users from America and around the world to interact and discuss CBD uses, treatments and products. The site has been active for 3 months and already receives 2000-2500 hits a day.

CBD of Denver Inc. (OTCMKTS:CBDD) just put out news that Rockflowr GmbH, a key new subsidiary recently acquired by the company, has signed a purchase agreement which lead to its largest sale to date.

According to that release, on June 30, Rockflowr GmbH entered into an agreement for 24 months with a Swiss company for the sale of bulk CBD flower.  The first purchase by the customer was signed on July 7, for 500 kgs (more than half a ton) of Hybrid Indoor CBD Flower. This one sale amounted to 341,500 CHF or approximately $363,000 USD in revenue. If the purchaser is satisfied with the product, they have agreed to purchase an additional 1,000 kgs per week for an initial 3-month trial period. Total revenue per week could exceed 680,000 CHF or 2,728,000 CHF per month.

“This is the largest sale in company history, and we are very excited to be able to share this information with our current and future investors,” said Gamma.

CBD of Denver Inc. (OTCMKTS:CBDD) has been showing increasing traction in the market and now appears to be on the way to posting strong sales growth given recently achieved deals through its subsidiary, Rockflowr GmbH. This will be an interesting up-and-comer to track.

 

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) bills itself as a company that develops and distributes hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.

Charlotte’s Web Holdings, Inc. is a market leader in the production and distribution of innovative hemp-based cannabidiol wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into whole plant hemp extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Industrial hemp products are non-intoxicating.

Charlotte’s Web current product categories include tinctures (liquid products), capsules, topical, as well as pet products. Charlotte’s Web hemp-based whole plant extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website.

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) just announced the appointment of Jean Birch to its Board of Directors.

According to the release, Ms. Birch brings broad experience as an independent public company director in addition to being a veteran C-level operating executive with deep experience in the consumer sector.  Ms. Birch currently serves as a director for Jack in the Box Inc. (NASDAQ:JACK), Forrester Research (NASDAQ:FORR) as well as  CorePoint Lodging Inc. (NYSE:CPLG). Previous board appointments include Papa Murphy’s Inc. (NASDAQ:FRSH) and Darden (NYSE:DRI).

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) managed to rope in revenues totaling $28.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 0.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($75.5M against $42.2M).

Published by Lisa Ray

Lisa has a Bachelor of Arts in journalism from Purdue University and 3 years of experience in the publishing field.

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